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Information and Disclosure in Strategic Trade Policy

  • Anthony Creane
  • Kaz Miyagiwa

We relax the standard assumption in the strategic trade policy literature that governments possess complete information about the economy. Assuming instead that governments must obtain information from firms, we examine firms' incentive to disclose information to the governments in the Brander-Spencer setting. With quantity competition, we find firms disclosing both demand and cost information, thereby justifying the literature's omniscient-government assumption. With price competition, however, firms have no incentives to disclose demand or cost information, so governments remain uninformed. Further, with quantity competition and unknown demand, governments are caught in an informational prisoner's dilemma.

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Paper provided by Institute of Social and Economic Research, Osaka University in its series ISER Discussion Paper with number 0705.

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Date of creation: Dec 2007
Date of revision:
Handle: RePEc:dpr:wpaper:0705
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  1. James A. Brander, 1995. "Strategic Trade Policy," NBER Working Papers 5020, National Bureau of Economic Research, Inc.
  2. Maggi, Giovanni, 1998. "A Note on "Strategic Trade Policy Design with Asymmetric Information and Public Contracts."," Review of Economic Studies, Wiley Blackwell, vol. 65(3), pages 623-25, July.
  3. Jonathan Eaton & Gene M. Grossman, 1983. "Optimal Trade and Industrial Policy Under Oligopoly," NBER Working Papers 1236, National Bureau of Economic Research, Inc.
  4. Brainard, S Lael & Martimort, David, 1996. "Strategic Trade Policy Design with Asymmetric Information and Public Contracts," Review of Economic Studies, Wiley Blackwell, vol. 63(1), pages 81-105, January.
  5. Chaim Fershtman & Kenneth L Judd, 1984. "Equilibrium Incentives in Oligopoly," Discussion Papers 642, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  6. Creane, Anthony & Miyagiwa, Kaz, 2008. "Information and disclosure in strategic trade policy," Journal of International Economics, Elsevier, vol. 75(1), pages 229-244, May.
  7. Sajal Lahiri & Yoshiyasu Ono, 1997. "Asymmetric oligopoly, international trade, and welfare: a synthesis," Journal of Economics, Springer, vol. 65(3), pages 291-310, October.
  8. Xavier Vives, 1990. "Trade Association Disclosure Rules, Incentives to Share Information, and Welfare," RAND Journal of Economics, The RAND Corporation, vol. 21(3), pages 409-430, Autumn.
  9. Maggi, G., 1997. "Strategic Trade Policy Under Incomplete Information," Papers 189, Princeton, Woodrow Wilson School - Public and International Affairs.
  10. Okajima, Yoshitomo, 2003. "A note on 'optimal strategic trade policy under asymmetric information'," Journal of International Economics, Elsevier, vol. 61(1), pages 243-246, October.
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